KATHMANDU, Feb 1: Department of Co-operatives (DoC) has reckoned that total investment of six biggest saving and credit co-operatives in the country is less than 34 percent of their total lending.
An initial report on financial health of saving and credit and co-operatives prepared by DoC also shows that the co-operatives have been maintaining at least 15 percent liquidity out of their total deposit mobilization, which is a comfortable limit for saving and credit co-operatives, according to DoC officials.
Two teams deployed by DoC prepared the report after monitoring five biggest saving and credit cooperatives in Kathmandu, including Oriental Saving and Credit Cooperatives, and Royal Pokhara Saving and Co-operatives in Pokhara.
"The initial report shows that saving and credit co-operatives do not face the risk of crisis as their lending is under acceptable limit. So, there is nothing to worry about the financial health of the co-operatives," Maheshwar Sharma Poudel, registrar at DoC, told myrepublica.com on Sunday.
Most of the saving and credit co-operatives surveyed during the study are mostly investing in sectors like agriculture, business, hire purchase and real estate.
The team had monitored the status of total capital, saving, lending, security status of investment, liquidity status, annual general meeting, auditors reports, among others.
The DoC had, a couple of months back, formed two monitoring teams in the capital and directed District Co-operatives Offices to monitor saving and credit co-operatives under their jurisdiction. It has set a target of monitoring 40 saving and credit co-operatives - both in the Valley and outside the Valley -- by the end of February.
"We will give a report to the government on the measures and policies to be taken to streamline the mushrooming saving and credit co-operatives that are collecting a huge amount from their members," Poudel added.
In a bid to find the clear financial position of saving and credit co-operatives across the country, the DoC has already called applications from consultancy firms. "Of the four interested firms, we will select one firm to conduct intensive research on co-operatives," said Poudel.
The firm will be assigned with the responsibility of assessing the contribution of the saving and credit co-operatives in national economy and employment generation besides studying their financial position.
In the second week of December, DoC imposed first-ever cap on land and housing loans, directing the co-operatives to limit their real estate loan exposures to 15 percent of their total loans portfolio by mid-July 2012 and further 10 percent within the next fiscal year. Similarly, the ratio of total loan exposure to real estate and housing will have to be brought to less than 35 percent within the next two years and further to 25 percent by mid-July 2013. DoC had also asked the cooperatives to maintain 10 percent liquidity of the total deposits and set single borrower limit at 10 percent of the total capital fund.
Of around 5,000 saving and credit co-operatives across the country, around 4,000 are concentrated in the capital alone. More than 15,000 co-operatives are operating across the country. According to conservative estimate, saving and credit co-operatives have mobilized over Rs 70 billion in deposits with two-thirds of the volume going to the housing and real estate sector.
Source: Republica